Consumer advocates back regulation plan

Insurance companies claim policy harmful

Published: Saturday, September 07, 2002

AUSTIN (AP)  Consumer advocates on Friday laid out their insurance reform agenda, which includes 100 percent regulation of homeowners policies, as a way to address the state's insurance crisis. They called on statewide candidates to endorse the plan.

Some consumers have seen their premiums rise as much as 200 percent. Other say they have had problems getting insurance. Insurers blame the rising cost of mold claims and other factors for higher costs.

The plan calls for regulation by forcing insurance companies to get prior approval before increasing rates or bringing unregulated affiliates into the "benchmark system."

The benchmark system would let insurers price their policies as much as 30 percent above or below the benchmark rate set by the insurance commissioner without getting prior approval.

Currently, about 95 percent of Texas policies are written under so-called Lloyds subsidiaries, which are exempt from rate regulation.

The plan also calls for rol ling back homeowners rates to the benchmark, banning credit scoring, requiring all insurance companies to offer comprehensive policies and implementing "prompt pay" penalties for auto and homeowners insurance companies that unfairly delay payments on claims.

Insurance industry groups said such heavy handed regulation will not help Texans.

If the regulations are enacted, "that would provide no incentive whatsoever for insurers to remain in Texas and compete on prices and products," said Sandra Ray, a spokeswoman with South western Insurance Informa tion Service.

Besides Texas Watch, the consumer plan is proposed by Consumers Union, AARP, the Mexican American Legal Defense and Educational Fund and the Gray Panthers.

Reached in Odessa on Fri day, Democratic gubernatorial nominee Tony Sanchez said he was on board with the consumer groups' plan.

"I am in favor of all of it," Sanchez said. "This is really costing a lot of people a lot of money and they are having a hard time making ends meet, this only adds to their burden."

A spokesman for Repub lican Gov. Rick Perry, who is seeking a full term, said the office has not yet seen the proposals.

But, spokesman Ray Sul livan said the governor would be open to having insurance companies get prior approval before implementing a rate increase or open to what is called a file-and-use system that would require companies to notify the state of any premium increases.